* EIA data shows unexpected fall in crude inventories
* OPEC to keep oil output targets unchanged []
* Dollar <.DXY> hits 10-month low against currency basket
* Technicals show oil to top five-month high []
(Adds detail)
By Christopher Johnson
LONDON, Oct 14 (Reuters) - Oil rose above $83 a barrel
Thursday, drawing support from a slump in the dollar to 2010
lows and following news of a surprise drop in U.S. stockpiles.
U.S. crude oil inventories fell unexpectedly last week while
gasoline stockpiles fell more sharply than analysts had
forecast, according to a government report released on Thursday.
The dollar fell to its lowest in 10 months against a basket
of currencies <USD=> <.DXY>, giving up 0.7 percent on the day,
making oil imports cheaper for emerging economies, while the
euro rose to an eight-month high. []
U.S. crude for November <CLc1> climbed 10 cents to $83.11 by
1541 GMT in a choppy session after earlier breaching $84 a
barrel. Last week, it hit a peak of $84.43, the highest since
May 4. ICE Brent fell 33 cents to $84.31.
"It looked bullish....We've updated our outlook for oil
prices. We see oil averaging $88 a barrel in 2011, and we think
a key factor will be the inventory trend reversing itself,
inventories relative to the five-year average declining," said
Mark Kellstrom, senior analyst at Strategic Energy Research &
Capital.
Crude stocks dropped by 416,000 barrels in the week to Oct.
8, partly because of the closure of the Houston Ship Channel,
confirming the trend from the American Petroleum Institute data
on Wednesday. []
Other analysts emphasised the weak U.S. currency.
"Today's move higher is all about the dollar," said Carsten
Fritsch, commodities analyst at Commerzbank in Frankfurt.
"Investors believe that a weak dollar is good for commodities,
so they buy. It is a self-fulfilling prophesy."
Christopher Bellew, broker at Bache Commodities, agreed: "I
think that right now the oil price is so strong because of the
weak dollar and strong prices across all commodities as an asset
class," Bellew said.
OPEC DECISION
Ministers from the Organization of the Petroleum Exporting
Countries decided in Vienna to keep oil production unchanged,
maintaining a supply policy that has served it well for nearly
two years. For Reuters stories on OPEC, click: []
OPEC is happy with oil prices as they are and wants to do
nothing to disrupt the supply-demand balance in the market.
Ecuador, which holds OPEC's rotating presidency, confirmed
the cartel had settled on no change in output and said the
group's next conference would be in Quito on Dec. 11.
Earlier a delegate told Reuters the ministers had been "100
percent" in agreement there was no need to change policy.
"The biggest challenge we have is to keep the oil market as
it is today," Saudi Arabian Oil Minister Ali al-Naimi said.
Oil prices did not react to the widely-expected OPEC deal.
Expectations of a fresh round of expansionary monetary
policy, or quantitative easing, by the U.S. Federal Reserve and
other central banks is helping fuel a rise in commodities.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on asset returns since Federal Reserve Chairman Ben
Bernanke said in August that the Federal Reserve was ready to
take more steps to boost the U.S. economy:
http://graphics.thomsonreuters.com/F/10/GLB_MKTQEP.html
Graphic on oil versus gold and copper:
http://graphics.thomsonreuters.com/AS/0810/ABE_20101410150319.jpg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Improving fundamentals in the oil market, including falling
inventories in the United States, rebounding OECD demand and
soaring imports in China, are also encouraging buying of crude
oil ahead of the northern hemisphere winter heating season.
(Additional reporting by Emma Farge and Alejandro Barbajosa;
editing by Jane Baird)
